September 17, 2010 / 12:17 AM / 7 years ago

UPDATE 4-RIM results top forecasts, shares jump

* Fiscal Q2 EPS $1.46, Wall Street consensus $1.35/shr

* Fiscal Q2 rev $4.62 billion; 12.1 million units shipped

* RIM sees Q3 EPS at $1.62-$1.70; revenue $5.3-$5.55 bln

* Net subscriber adds only key metric to miss consensus

* Shares jumped as much as 6.5 pct in after-hours trade (adds details, co-CEO comment; all figures in U.S. dollars unless noted)

By Alastair Sharp

TORONTO, Sept 16 (Reuters) - BlackBerry maker Research In Motion RIM.TO RIMM.O reported stronger-than-expected profit, revenue and shipments on Thursday, defying expectations it would lose more ground to Apple (AAPL.O) and other rivals.

RIM shares surged as much as 6.5 percent following its fiscal second-quarter results, released after the close of regular trade, as the company issued an outlook for the current three months that also topped expectations.

The robust performance, marred only by a shortfall in net subscriber additions, came as a surprise for investors who have been focusing on the company’s perceived shortcomings.

It ran counter to a growing perception that RIM’s position in the booming global smartphone market is eroding while Apple’s (AAPL.O) iPhone and devices running Google’s (GOOG.O) Android operating system are picking up steam.

“Clearly I think people are underestimating the smartphone market coupled with the strength of RIM within it,” said Daniel Ernst, an analyst at Hudson Square Research.

RIM launched its highly anticipated BlackBerry Torch in the United States in August, with AT&T (T.N) as the initial carrier, but the reception for the touchscreen device was muted, fueling negative sentiment ahead of Thursday’s results.

“Torch launched late in the quarter, in one country with one carrier. Even if it had done fantastic it wouldn’t have changed the numbers that much,” Ernst said.

The Waterloo, Ontario-based company will roll the Torch out to 75 more carriers in the current quarter, RIM said in a conference call following the earnings.

At the same time, RIM is walking a tightrope in India, Saudi Arabia and the United Arab Emirates, where governments seek access to the company's fabled encrypted data. The controversy has exacerbated concerns about RIM's competitive position. [ID:nSGE68102B] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ RIM numbers vs consensus: link.reuters.com/kyr53p Smartphone market: link.reuters.com/vad83p ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

STRONG SHOWING

For the three months ended Aug. 28, profit rose to $796.7 million, or $1.46 a share, on revenue of $4.62 billion. That compares with earnings of $475.6 million, or 83 cents, in the same period last year.

Analysts had on average forecast earnings of $1.35 per share and revenue of $4.47 billion, according to Thomson Reuters data.

RIM said about $1.5 billion worth of stock repurchases in the quarter added about 2 cents to its earnings per share.

RIM said its strong showing would continue in the current quarter ending Nov. 27. It forecast earnings per share between $1.62-$1.70 on revenue in a $5.3 billion to $5.55 billion range. Both numbers streaked past Wall Street estimates of $1.39 and $4.8 billion.

Jim Basillie, RIM’s co-CEO, heavily hinted in the conference call that RIM would use the upcoming Dev Con developer conference in San Francisco to paint a picture of future plans.

“You’re going to see some very interesting strategic extensions at Dev Con and signaling where we’re going, so I think we said on the last call this will all become very, very apparent by the end of September,” Basillie said.

The average selling price of BlackBerry devices nudged higher in the latest quarter, to about $304, and should rise to between $310 and $315 this quarter as higher-end devices like the Torch roll out, RIM said.

RIM expects to ship between 13.8 million and 14.4 million units in the third quarter, well ahead of the 12.5 million expected by 16 analysts in a Reuters poll.

It shipped 12.1 million units in the second quarter, at the high end of its own guidance and well above the 11.8 million expected by analysts.

“This is a nice surprise on the upside. Revenue was better, EPS was better, units were better both for the current quarter, as well as the November quarter guidance,” said Matthew Thornton from Avian Securities in Boston.

SUBSCRIBER NUMBERS DISAPPOINT

Still, the Canadian technology company added fewer subscribers than expected, which RIM blamed on tough competition in the United States early in the quarter and the row over data security in India and the Middle East in August.

“That was really the only weak spot here, but that is more than compensated from just really strong results across the board and really strong guidance for next quarter,” said Dushan Batrovic from Dundee Securities.

RIM said it expects to add between 5 million and 5.4 million subscribers in the current quarter. Analysts had expected 5.2 million net subscriber additions this quarter.

RIM’s gross margin was 44.5 percent, versus expectations of 43.9 percent, while the company said it expects its third quarter margin to slip to around 42 percent.

RIM said it will no longer announce net subscriber additions and average selling price figures after the third quarter, as overseas revenue streams grow and the metrics become too complex to measure.

The shares were trading 4 percent higher in after-hours trade in the United States at $48.36 after rising as much as 6.5 percent immediately after the announcement.

The stock had been up more than 2 percent before the results, largely as a result of short-sellers covering their positions. (Additional reporting by Euan Rocha in Toronto, Sinead Carew in New York, Susan Taylor in Ottawa; Editing by Frank McGurty)

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